Brad M. Barber
University of California, Davis
University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)
University of California, Davis - Graduate School of Management
January 17, 2017
We study investments in impact funds, defined as venture capital or growth equity funds with dual objectives of generating financial returns and positive externalities. Being an impact fund elevates a fund’s marginal investment rate by 14.1% relative to a traditional VC fund, even more for funds focused on environmental, poverty, and minority/women issues. Europeans and UNPRI signatories have sharply higher demand for impact. Three investor attributes – household-backed capital, mission-oriented investors, and investors facing political/regulatory pressure to invest in impact – account for the higher impact demand. In contrast, legal restrictions against impact (e.g., ERISA) hinder 25% of total demand.
Number of Pages in PDF File: 57
Keywords: Venture Capital, private equity, impact investment, socially responsible investment, UN principles of responsible investment, sustainable investing, corporate social responsibility.
JEL Classification: G1, G2
Date posted: December 20, 2015 ; Last revised: January 25, 2017